Discuss about the Analysis Of Circular Economy.
Circular economy is a major alternative to the traditional linear type of economy in which the resources are kept in use for the longest time. The organizations which implement the concept of circular economy aim at extracting maximum value from the various resources that are available for them. The resources are used for the purpose of regenerating the services and products at the end of the service life. This can be defined as a regenerative system in which the resource input, waste, the energy leakage and emission are minimised by the closing, slowing and narrowing loops of materials (Andrews 2015). This process can be achieved with the help of preservation, long-lasting design, reuse, repair, revamping and the closing of the recycling loops. The major advantage of the circular economy is that the achievement of a sustainable world does not always require a change in the lifestyle of the consumers or the loss of revenues of the company. The circular business models have proved to be profitable in nature like the linear models and consumers are also able to enjoy the same type of products (Blomsma and Brennan 2017).
This report will be based on the analysis of the concept of circular economy and the ways by which this concept is practically used in the modern organizations. The drivers and the benefits of circular economy to the organizations and the consumers will also be analysed in the report.
Description of the organization
The organization that is taken into consideration for the analysis of circular economy is Unilever PLC which is a British-Dutch transnational organization which operates in the sector of consumer goods. The headquarter of the company is locate in London in the United Kingdom and Rotterdam in Netherlands. The products that are offered by the company include, drinks, food, personal care based products and the cleaning agents. The sector in which the organization has its operations in the FMCG or the fast moving consumer goods section. Unilever is also considered to be one of the oldest multinational company and the products that are manufactured by the company are available in more than 180 countries in the world (Bocken et al. 2016). Unilever is said to own more than 400 brands and the turnover of the company in the year 2016 was more than 50 billion Euros. Some of the major and famous brands of the company are, Axe, Dove, Knorr, Magnum, Rexona, Surf and Sunsilk. The company is dual listed in nature which consists of the Unilever PLC in London and Unilever N.V. in Rotterdam. The company is known for using the concept of circular economy where the resources are used in a recyclable manner. The organization has been using the resources that are available for its operations in the process which supports the circular economy (Ellenmacarthurfoundation.org. 2018).
Operations and concepts of circular economy
The concept of circular economy is based on the redefinition of growth and the focussing on the positive benefits to the society as a whole. This entails the decoupling economic activity in a gradual manner from the consumption of the limited resources and designing of waste out of the entire system. This process is supported by the transition to the renewable sources of energy, the circular models of businesses which helps in the building of the natural economic and the social capital as well. This process is based three major principles which are, designing out pollution and waste, keeping the materials and the products in use and regenerating the natural resources (Franklin-Johnson, Figge and Canning 2016). In the process of circular economy, the economic activity builds and then rebuilds the health of the overall system. This concept further recognises importance of the economy which needs to work in an effective manner at all the scales for the large and the small business organizations. The transition to the circular economy not only relates to the adjustments that are made for the purpose of reducing the impact of the linear economy. This also represents the shift which has been experienced which helps in building the long-term resilience, generating economic opportunities and business and providing the societal and environmental benefits (Geissdoerfer et al. 2017).
This model mainly distinguishes between the biological and the technical cycles. The consumption takes place mainly in the biological cycles where the food and he biological based materials are planned into the feedback system with the help of various processes. The notion based on circularity has quite deep philosophical and historical origins. The idea which is based on the feedback of the cycles in the real-world systems is quite ancient and has been spoken about in many schools of philosophy. The digital technologies in the modern business environment have the ability to support the changeover of a business organization to the circular economy process. The circular economy based model provides huge number of opportunities for the purpose of redesigning and rethinking the ways by which the products are developed in organizations (Genovese et al. 2017).
The concept of circular economy is currently promoted by the EU and the other national government as well. Many business organizations in the world are also promoting this concept of circular economy in the market. The circular economy can also be considered as a collection of various ideas from the different fields of study and the concepts. The circular economy based concept and the practice has been established and further led by the practitioners which includes, the policy makers, business consultants, the business organizations and the business foundations. The scientific research which is based on the circular economy is unexplored. The implementation of circular economy has been successful due to the sustainable development based opportunities that it provides to the organizations. This development is based on the ability of the companies to conserve resources for the future generations (George, Lin and Chen 2015).
The circular economy is a concept which has become popular among the business organizations within the last few years. The usage of this concept has also grown a great deal in many number of ways. The circular economy is defined with the help various types of concepts and activities that are related to it in many different ways (Ghisellini, Cialani and Ulgiati 2016). The seven major pillars that are related to the usage of circular economy in the organizations are as follows,
- The materials are cycled at the continuous high values. The priority of the process is based on the preservation of the material complexity with the help of cascading the materials in the complex forms. The cycles are designed to be of the length which are relevant on the human timescale.
- The energy is based mainly on the renewable sources. The system is designed in such a manner which can provide the highest levels of energy efficiency without compromising on the performance and the service output (Lacy and Rutqvist 2016).
- The levels of biodiversity are supported and then enhanced by the human activities. The major principle of the circular economy is based on the preservation of complexity and the ecological diversity as well.
- The human society and the culture are preserved with the help of the preservation of the natural resources in an effective manner. The maintenance of the social cohesion and human cultures have also become quite important.
- The health and the well-being of human and the other species in the world are supported by the implementation of this concept (McMullen 2018).
- The various human activities are able to generate value that are measured beyond the financial benefits. The finite resources are used in a sustainable manner.
- The economic system is based on the various government systems, mechanisms and the incentives which can allow to respond to the system shocks and the crises that were faced by the companies.
Drivers of circular economy
The economic development of the country and the organization in which the concept of circular economy is implemented can be improved. The EU has been supporting the concept of circular economy from the time of its inception. The concept provides effective and pragmatic solutions to depletion of the natural resources for the functioning of the modern organizations. The circular economy is thereby based on the paradigm shift which is related to the change of waste to a resource for the company. The improvement of the economic models is important for and thinking out of the box also plays a major role in this case (Murray, Skene and Haynes 2017).
The contribution that is provided by the concept of circular economy to the sustainability of the environment and the existence of human is a major social driver of the concept. The transition phase from the linear economy to circular economy can be quite difficult for the various organizations.
The process of circular economy can prove to be a major driver of the sustainable development. The usage of the various virgin materials is reduced and the wastes of the organizational processes are also reduced in the process. The sustainable brands and the organizations are implementing this strategy in the various processes to create a sustainable environment of their production. The government of the countries are also taking part actively in the successful implementation of the concept of circular economy (Parida and Rönnberg Sjödin 2017).
Practical application of the circular economy
Business model of the company
The concept of sustainability is the key to the success of the business model of Unilever. The new business model which has been developed by the company has sustainability at the heart of the operations. The company has pledged to have environmental impact of the products and the sales of the company are also being planned to be doubled. The organization further needs to provide a report in an annual basis related to the improvements that have been made in the achievement of the goals. The demands of the consumers of the FMCG company need to be fulfilled (Planing 2015).
The environmental impact that is caused by the products in terms of the usage of water, greenhouse gas emissions and the waste of the production processes need to be reduced. The improvement of the health and well-being of more than one billion people in the world is the main aim of the new business model that has been designed by Unilever. The creation of value in the environment and the sustainable consumption of resources is also based on the new model of business that will be used by Unilever. The company is further aiming at rising the profits in the industry with the help of sustainable operations in the environment. The business model of the company is thereby based on the improvement of its operations in the environment and the rise of its profits as well (Pomponi and Moncaster 2017).
Operations and the supply chain of the company
Unilever has been working closely with the organization named Ellen MacArthur Foundation for the proper implementation of the concepts of circular economy in the various organizational processes. The concept related to circular economy is considered to be a way out from the wastes that are generated by the organization. The circular economy is also able to deliver growth for the business leaders in the circular economy. Unilever is an Anglo-Dutch organization which operates in the sector of consumer goods. The major goals of the partnership between the company and the foundation is to unlock the various economic opportunities that are provided by the process of circular economy (releases 2018).
The major emphasis areas of the partnership are, progress of the pilot projects to develop the Fast Moving Circular Goods, to develop the assets and the resources that are required to scale the changes across the business. The association with the stakeholders of the industry to catalyse the systematic change towards the circular flow of plastic packaging materials.
The packaging of products is a major part of the production process. The use of plastic for the packaging related purposes have caused some major issues in the environment. Unilever has thereby taken steps to introduce sustainability in the supply chain by using the concepts that are based on the use of recyclable plastic for the packaging of products. The organization is committed towards transforming the use of the plastic packaging for their products within the year 2025. Unilever wishes to lead the way towards the successful application of the circular economy based concept in the packaging of the materials (Winans, Kendall and Deng 2017). The company is one of the brands which has been able to make the plastic package based commitments. The organization has also taken essential steps towards the reduction of plastic wastes that are caused by the production and packaging process. The company has thereby made important changes in the supply chain which has led to the increased use of recyclable materials for the purpose of packaging the products in an effective manner (Pomponi and Moncaster 2017).
Benefits provided by circular economy to Unilever
Unilever had made the commitment to use 100% recyclable materials for the packaging purposes within the year 2025. The company has further demanded collective action from the other FMCG companies to take similar actions related to their production based processes. The company is leading the way towards a circular economy which is based on the sustainable operations. This step has been taken by the company for the purpose of reducing the amounts of ocean waste which has led to many issues in the lives of the fishes and other ocean creatures (Parida and Rönnberg Sjödin 2017). The company has three major commitments that are related to the successful implementation of circular economy by Unilever which are,
- To ensure that all the plastic packaging is made with the help of reusable materials.
- To renew the membership in the Ellen MacArthur Foundation for the next three years.
- To invest in the proving and then sharing with industry (releases 2018).
The weight of the package that is used by the company is also aimed to be reduced so that the company can benefit from the versatile materials that are used for providing benefits to the customers. The organization has been able to lead the way of the implementation of circular economy in the FMCG sector which has helped in the improvement of its reputation in the market. The other companies have also benefitted hugely from the various processes that have been implemented by Unilever to maintain sustainable operations (Pomponi and Moncaster 2017).
The report can be concluded by stating that the organizations in the modern business environment need to implement the concept of circular economy so that the operations can be sustainable in nature and the effects of the operations on the environment can be reduced. Unilever has implemented this concept in a successful manner and further has been able to improve its operations in the market. The company has been able to lead the way in the process of successful application of circular economy in the organization. This has helped the company to improve its operations and lead the way for organizations in its sector.
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